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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Ei = (%dQd good X)/(%d Income)






2. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






3. The mechanism for combining production resources - with existing technology - into finished goods and services






4. Costs that change with the level of output. If output is zero - so are TVCs.






5. Exists if a producer can produce more of a good than all other producers






6. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






7. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






8. Product demand - productivity - prices of other resources - and complementary resources






9. AVC = TVC/Q






10. The price of a good measured in units of currency






11. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






12. The additional cost incurred from the consumption of the next unit of a good or a service






13. The difference between total revenue and total explicit costs






14. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






15. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






16. The sum of consumer surplus and producer surplus






17. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






18. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






19. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






20. Occurs when LRAC is constant over a variety of plant sizes






21. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






22. When firms focus their resources on production of goods for which they have comparative advantage






23. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






24. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






25. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






26. The ability to set the price above the perfectly competitive level






27. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






28. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






29. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






30. The difference between total revenue and total explicit and implicit costs






31. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






32. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






33. Ed = (%dQd)/(%dP). Ignore negative sign






34. Ed > 1 - meaning consumers are price sensitive






35. The output where ATC is minimized and economic profit is zero






36. All firms maximize profit by producing where MR = MC






37. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






38. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






39. Total product divided by labor employed. APL = TPL/L






40. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






41. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






42. Ei > 1






43. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






44. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






45. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






46. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






47. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






48. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






49. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






50. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply